Reserve Bank of India (RBI) Governor Shaktikanta Das on Monday flagged the issue of high costs and low speed associated with cross-border payments and said the central bank digital currency (CBDC) instant-settlement feature could play an important role in addressing those issues.
“Notwithstanding the progress made so far, the key challenges to existing cross-border payments continue to be high cost, low speed, limited access, and insufficient transparency,” Das said in his keynote address at the G20 TechSprint Finale organised by RBI and Bank for International Settlements (BIS).
He said faster, cheaper, more transparent, and more inclusive cross-border payment services would deliver widespread benefits to people and economies worldwide. “It would also support economic growth, international trade, and financial inclusion.”
Under India’s G20 presidency, the fourth edition of G20 TechSprint was launched on May 4 with the theme ‘Technology solutions for cross-border payments’.
Last year, the RBI launched two CBDC pilot projects — for retail and wholesale segments. Das said the RBI was slowly and steadily expanding the pilot to more banks, more cities, more people, and more use cases.
“The empirical data that we are generating would go a long way in shaping the policies and future course of action. With its instant-settlement feature, I believe, CBDCs can play an important role in making cross-border payments cheaper, faster, and more secure,” Das said.
Commenting that the Unified Payments Interface (UPI) has been a game-changer for India’s digital payments ecosystem, Das said it helped to drive financial inclusion by bringing millions of unbanked individuals into the formal financial system.
“With over 10 billion transactions a month, UPI has become the backbone of digital payments in India and has helped to catalyse a wave of innovations in the fintech sector.”
He said more than 70 mobile apps and over 50 million merchants accept UPI payments.
